The Denim Parachute

ByDSNovember 6, 1990

LAYOFFS are multiplying with the economic slowdown in the United States. Only last week General Motors Corporation, the nation's largest company, announced it would close four assembly plants permanently and spelled out plans for five more likely plant closings over the next three years. These conditions are putting to the test a law passed by Congress in 1988 that requires employers to give employees 60 days' notification of a layoff. When that legislation was being debated, business organizations fought it tooth and nail. They forecast harmful consequences for companies and the economy.

The record shows little if any evidence of such harm. So far, says AFL-CIO economist Markley Roberts, the notification law ``is working without the problems and complications employers claimed would occur.''

Under the law, when companies with 100 or more employees lay off 50 or more workers at one site, management must give employees 60 days' notice and pay for that period. That, of course, costs some money. But with many corporations granting executives ``golden parachutes'' - large chunks of money should they depart the company for one reason or another - Congress felt it fair that workers get at least some financial recognition of their contributions to a company and some time to look for a new job.

The law does include a few loopholes permitting faster layoffs than 60 days. For instance, notification could be skipped in the case of a natural disaster or should a faltering company need to make layoffs more quickly than 60 days if this is essential to get financing or business that could rescue the firm from failure. Contrary to union fears, these provisions have apparently not been used much or abused.

In its monthly survey of 60,000 households to determine changes in employment and unemployment levels, the Labor Department also checks to see how many people are on layoff. After the 1982 slump that number sometimes exceeded 1.1 million workers. Then it dropped back to just over 800,000. Since mid-1989 the figure has started to rise again, however. The department reported Friday that nonfarm payrolls lost another 70,000 jobs in October.

Now many companies are giving 60-day notification of layoffs to comply with the law, making news on the business pages in the process. In some cases, notification is an insurance policy in anticipation of declining sales. If business doesn't turn out so bad, not all of the notified workers will actually be laid off.

At least the law is giving workers some time to prepare themselves financially and mentally.